According to the Office for National Statistics, the most recent UK labour market bulletin shows 95,000 people in the UK lost their jobs through redundancy from March to May 2018. Redundancy is arguably one of the least welcome of life's changes.
Knowing the facts about your situation may help you navigate your way through with the least stress possible.
Anyone being made redundant must be selected fairly. Your employer must identify which employees should be considered for redundancy, then use an objective way of selecting who will be made redundant.
Employers may ask for volunteers for redundancy within the selection group, or they may use criteria such as last in, first out. They may also decide by reviewing factors such as disciplinary records, staff appraisals, skills, qualifications and experience. Sometimes employees are asked to reapply for their jobs, to help employers make their decision.
Being selected on account of your gender, age, race, disability or sexual orientation - along with several other factors - is classed as unfair dismissal.
For information on what to do if you think you've been affected by unfair dismissal, read our article on making a claim to an employment tribunal.
Redundancy pay entitlement
One of the most common questions asked about redundancy is about the issue of redundancy pay. Statutory redundancy pay is the legal minimum you can get if you've been working for your employer for two years or more. You could also be entitled to extra money if your employment contract says so.
The amount of statutory redundancy pay you could get is calculated using your age and how long you've been in your current job.
- If you worked for your employer when you were 22 years old or younger, you'll get half a week's pay for each of those years.
- You'll get a week's pay for each full year you worked in your current job while between the ages of 22 and 41.
- For every year you worked for your employer while aged 41 or older, you'll get one and a half week's pay.
There is a cap on how much you can get (currently this is £15,240). You can calculate your statutory redundancy pay,
The good news is you won't have to pay any tax or National Insurance on your redundancy pay - including any extra payout you may get from your employer - if it's less than £30,000.
There are rules about how much notice you have to be given before you're made redundant:
- If you worked for your employer for a month up to two years, you must get at least one week's notice.
- If you worked for two to 12 years, your employer must give you one week's notice for each year.
- If you've been employed for 12 years or more, you must receive 12 weeks' notice.
During your notice period you will be paid as usual, or your employer may make you redundant immediately if they pay you for the correct notice period (unlike statutory redundancy pay this is taxed, as is any holiday pay you may be owed).
Anyone who's affected by redundancy dismissals must be properly consulted by their employer. During this consultation you're entitled to find out why you're being made redundant and whether or not you could avoid being made redundant or if there are any alternative options available to you.
When several employees are being made redundant at the same time, the consultation must include the employer as well as an employee representative, such as a trade union rep or an employee who's been voted as a rep. The aim is to have an open and clear dialogue with the aim of trying to avoid redundancies and reducing the effect any redundancies may have on employees and the workplace.
If your employer doesn't meet all of their legal requirements for your redundancy consultation, you may be able to make a claim to an employment tribunal.
Offers of suitable alternative employment
During the consultation, your employer must consider whether or not there is a suitable alternative job for you. If they have such a job but don't offer it to you, you may be able to claim for unfair dismissal.
You don't have to accept an alternative job. But if you refuse it without good reason you won't be entitled to any statutory redundancy pay. If you're not sure about the alternative job, you can try it out for four weeks.
Need more information? Our Law Express factsheet on redundancy goes into much more detail about your rights and your employer's obligations.
If you're an ACA student, past or present ICAEW member or a member of their families, you can also find out more about your redundancy rights via our legal helpline. Call +44 (0) 1788 556 366 to arrange to speak to an expert advisor (UK only).